The Millennials Generation

Feb 2016

I just read a disturbing column about millennials.  Millennials are the generation born in the early 80s through the 90s.  We all know how smart the millennials are; after all, all you have to do is ask them.  That being said, one area where they are not so smart and where it could cost them significantly is financial literacy.  In this area, most millennials receive a failing grade.


According to a recent study by Price Waterhouse Cooper and George Washington University, it was found that only 24 percent of millennials demonstrate basic financial knowledge and just eight percent would receive a high grade for financial literacy.  In addition, nearly one in three millennials regularly overdraw their checking accounts.  Furthermore, just 36 percent of millennials have a retirement account and of those, 17 percent took a loan and 14 percent took a hardship withdrawal in the last year.  When you compare other Americans to the millennials generation, according to the report, the millennials have the lowest level of financial literacy.


There are many reasons why the millennial generation finds itself in such poor financial shape.  Millennials are in significant debt as many of them are burdened with student loans. This, coupled with a changing job market, does make it difficult.  However, no matter how difficult it is, millennials still must learn to live within their means.  Parents also deserve the blame sometimes as many millennials, even after they’re on their own, are still depending upon the bank of mom and dad.  Although, it’s wonderful when parents help their children financially, one of the downsides is that it doesn’t teach the millennials that they can’t always immediately get what they want and that they have to live within their means.


If you’re a parent of a millennial who is one of those in the majority, one who is clueless about finances, you cannot afford to delay any more.  You have to encourage them to live within their means and to save for their future.  One thing you may wish to consider is beginning the process of reducing your child’s financial dependence upon you.  As difficult as this may be, you may have to put a cap on the amount of aid you will provide.  Although millennials are notorious for not asking for advice, (because they generally think they’re smarter than everyone else) something you can do to help is review their finances and help them set up a budget.  The millennial generation has been brought up to spend, spend and spend some more and it’s about time they start having the discipline to realize that this strategy is not sustainable.


In some situations it makes sense to incentivize your child to take better care of their finances.  If you have the wherewithal, you can establish some sort of matching program.  It can be in association with a 401(k) Plan, IRA or another type of investment account.


For parents of millennials, it’s important that you recognize the millennials generation has a problem with financial literacy and they need help.  They may not want to admit they need help, but the numbers show that this generation, unless they change their ways, are going to be in severe financial distress.  Therefore, as a parent, one of the best things you can do is to be a little more aggressive in helping your children with their finances.  Of course, they may not want the help; however, they’re adults now and it’s about time you talk to them as an adult.  They need to know that unless they get their financial house in order, their future is going to be bleak, no matter how much money they make or inherit.


Good luck!






Rick is a fee-only financial advisor.  His website is  If you would like Rick to respond to your questions, please email Rick at